Their new battle is more about the conservative party than the schools

Rudy Giuliani can't pass a pissing match without reaching for his zipper. In fact, the only way his proposed west side football colossus can generate the necessary year-round revenue is if he agrees to stage his weekly High Noon­showdowns- with-whomever there, drawing crowds of thousands.

For the first time, though, the mayor has taken on a pistolero with superior arc and throw weight: Peekskill farm boy George Pataki, who last week named a Moreland Act Commission with subpoena power to nail the mayor on school policy.

Twenty-four years prior to Giuliani's surprise 1994 endorsement of Mario Cuomo over Pataki, John Lindsay, the last Republican mayor of New York, endorsed Democratic gubernatorial candidate Arthur Goldberg, who was then challenging three-term incumbent Nelson Rockefeller. Lindsay, like Giuliani, said it was a matter of principle. Both picked losers.

Hiroyuki Ito

Miles apart: Wilson and Spence at last week's SCA board meeting

Though Lindsay vowed in 1970 to remain a Republican, he was soon forced to switch parties. Rudy is still a Republican four years after he trashed the "ethics" of a possible Pataki administration, but he is now learning a thing or two about the long-term memory of elephants.

The dish-it-out-but-forget-about-taking-it King Prosecutor and Cop Mayor has only once before been on the receiving end of a government subpoena, and he's still freaking out about that. On February 10, up in Albany, the Court of Appeals will hear oral argument on the case of H. Carl McCall versus the City of New York, a nearly two-year-old lawsuit filed when the Giuliani administration defied 17 administrative subpoenas issued by the state comptroller in an effort to audit the performance of half a dozen agencies.

Should McCall win, as he already has before five appellate and one Supreme Court judge, his auditors will be swarming all over Rudy's government at just about the same time that Pataki's probers will be digging into the School Construction Authority (SCA) and the Board of Ed. The results of both should be available by the start of the 2000 race for the U.S. Senate and McCall's scheduled audits include everything from the NYPD's crime stats to the tracking of welfare recipients to Health Department restaurant inspections.

The governor's school probe is a response to an array of Giuliani insults and miscalculations. He blocked Pataki's convention center expansion for years and then revealed his own version of it as part of a stealth football-stadium plan. He traveled the country last year making himself the state's No. 1 Republican instead of delivering a decent vote for the governor in the city. He gave Peter Vallone the only issue he had in the 1998 gubernatorial race: Yankee Stadium. And just days before the governor announced the commission, Liberal Party boss Ray Harding, the mayor's well-leashed attack dog, went to the Post to make tartly explicit the implicit theme of Rudy's national tour: it is Giuliani, not Pataki, who's responsible for every uptick in New York life.

But the proximate cause of the Moreland Act appointments may well have been the release shortly before Christmas of a report on the SCA that was commissioned by the mayor and prepared by his own Department of Investigations. The findings pinned indirect responsibility for the death of 16-year-old Yan Zhen Zhao on the negligence of an unqualified SCA project officer, Gary Marrone, who'd been hired because of his political ties to the governor.

The charges were so searing and seized upon by Assembly Education Chair Steve Saunders, who will hold a hearing to investigate them Friday that Pataki had to quietly ask his only appointee on the three-member SCA board, Paul Atanasio, to resign. Atanasio, a close ally and one-time congressional candidate of Conservative Party boss Mike Long, had allowed his top aide, Fran Vella Marrone, a party vice chair, to get her husband the SCA job in violation of an agency antinepotism rule. Gary Marrone permitted the contractor at P.S. 131 in Brooklyn to remove fencing precisely where bricks fell from the roof and killed Zhao.

The governor's commission is likely to prove that not all of the problems at the SCA were caused by his departed trustee. It is, after all, chaired by Howard Wilson, who is such a Giuliani sychophant that Rudy tried unsuccessfully to install him as his successor as U.S. Attorney in 1988 and named him investigations commissioner for the first three years of his administration. Wilson went unmentioned in the Giuliani report, but is unlikely to achieve the same invisibility when Pataki's commission finishes its job.

The third trustee is Harry Spence, the deputy schools chancellor brought here from Boston by Rudy Crew. While Crew has lashed out at the governor for launching this investigation, it's been Spence, more than anyone up to now, who's been the multibillion-dollar agency's lonely voice of probity.

For example, at the June meeting of the board, Wilson and Atanasio voted down a Spence motion to direct the SCA Inspector General "to conduct a full analysis and investigation of all hires" during the period when Gary Marrone was initially employed. Wilson called Spence's resolution "a witch-hunt," even though the DOI report eventually found that Fran Marrone had attempted to put 20 other people on the payroll, succeeding with at least one other unqualified project officer who was also ultimately fired. (Citing the fifth and first amendments, Marrone refused to provide the names of these 20 to investigators, and most are still unknown.)

Wilson, who was so closely aligned with Atanasio he refused to criticize his fellow trustee when asked by the Voice after last week's SCA board meeting, said in June that he thought the Zhao "incident is being overblown."

When Atanasio assailed Spence for raising the issue of Gary Marrone's hiring, Wilson declared: "There is no reason to have an investigation of the employees of this agency, any more than it is necessary to conduct an investigation of the employees of the Board of Education." Wilson also rejected Spence's request that "the General Counsel write an opinion, as quickly as possible, as to whether Marrone was hired in violation of the agency's nepotism policy."

Wilson's alliance with Atanasio may well have been a by-product of Giuliani's increasingly friendly ties with Mike Long. The Voice has learned that early in 1997 just months after Wilson took over at the SCA Long met with the mayor at Gracie Mansion and worked out an understanding with him. Having run candidates against Giuliani in 1989 and 1993, Long agreed to leave his ballot line blank in 1997, the first time the party had ever not endorsed a candidate for mayor. Long reportedly sought no quid pro quo for this favor, but a friendly relationship between Giuliani and the Bay Ridge liquor store owner developed in the aftermath of that peace meeting.

The fly in the ointment became the Zhao probe that Giuliani authorized at a time when no one knew the trail would lead to a nest of Long associates (the Voice exposed these ties in "Patronage Outrage," May 5, 1998). The report was so potentially troubling to Giuliani's political relationships that its release was delayed for weeks while City Hall reviewed it. Sources involved say that interviews ended in September well before the governor's November reelection and that the report was bogged down in fact-checking and polishing for the next three months. A footnote says that the last SCA response was received on October 31, almost two months before Giuliani finally approved its December 16 release.

Incredibly, the night before the DOI press conference, Giuliani and top aides Crystine Lategano, Randy Levine, Joe Lhota, and Rudy Washington attended a Conservative Party "thank you" event at Turtle Bay, a bar in the 50s owned by Long's sons. Atanasio was there, too. A Giuliani aide called Long a few days before the event and asked if it was okay if they came the first time the mayor has attended a Conservative function. The report's release, which had been tentatively set to precede the party, was put off.

Mike Long is now in a classic tail-wagging-the-dog political position. His party will nominate a candidate for the Moynihan seat next spring, many months before any Republican primary. He has made it abundantly clear and he has a record for meaning what he says that no candidate for any major office can expect to have both his and Ray Harding's lines. Unlike Harding, Long actually believes there's an ideological difference between the Conservative and Liberal parties.

Unlike all three of his potential GOP opponents Westchester D.A. Jeanine Pirro, Congressman Rick Lazio, and Nassau County Executive Tom Gulotta Giuliani has never been endorsed by the Conservatives. Yet no Republican has won statewide without the Conservatives since 1974, when the last Republican/Liberal, Jacob Javits, was reelected to the senate.

There are those in Giuliani's inner circle who believe it's time the mayor cut Harding loose to pursue a relationship with the Conservatives. Rudy and his minions also hope Long doesn't mean what he says. But if Giuliani gets a Senate primary, a spring designation on the Liberal line could be a detriment in a September race against a Republican already endorsed by the Conservatives. The only use Giuliani can make of Harding's party is as a source of millions in soft-money contributions, outside the $1000-a-head limits of federal law.

Chuck Schumer used two federal accounts set up by Harding one called Win NY and the other a Liberal Party PAC to buy $1.7 million in commercials in the 1998 senate race, a classic end run around the limits. Most donors contributed the maximum $5000 to those committees and Joe Mercurio, a Liberal Party consultant, told the Voice he'd "be amazed if Rudy didn't do the same." Though Giuliani could direct his soft-money donors to the Conservatives, just as Schumer's camp did with the Liberals, many of Rudy's regular givers might hesitate before dumping gobs of cash into the coffers of an antichoice, antigay, pro-gun party.

Long is not irretrievably upset with the mayor about the DOI report, according to sources close to the party leader. It contains no conclusory language about Atanasio and, in a stunning break with DOI procedure, he was never put under oath, though five witnesses contradicted his version of events. The report was released on the scheduled day of an impeachment vote, while bombs were dropping on Iraq. And until Pataki announced the Moreland Commission, Giuliani refused to say anything publicly about Atanasio, making tepid references since.

An unpaid SCA trustee, Atanasio makes his living as an underwriter in charge of Bear Stearns's New York bond business and Giuliani participated in the 1996 decision to elevate Bear to a senior management position on billions in city bonds. Atanasio had retained Long as a consultant at his previous investment banking firm, but Long says he's not on Bear's payroll. Ironically, Harding's law firm is representing Bear in the ongoing criminal probe being conducted by Manhattan D.A. Robert Morgenthau as well as other matters.

If the Atanasio storm blows over, and Pataki cools off, Long and Giuliani may yet do business, and the deal they cut may shape the senate race and state politics for years.